The present disclosure generally relates to financial engineering, and specifically to the diversification of risk related to the creation of works of art and investment in works of art.
The art business in general and the visual art business in particular are proving to be an economically sound, high-profit business even in tense economic climates. Lead by individual and corporate investors, auction houses, collectors, Wall Street cash funds and art dealers, investment in works of visual art has maintained above-average returns and is recognized as a high-performance investment. As such, it has attracted new types of investors, such as commercial corporations (albeit preferential tax treatment and non-disclosure regulations can also be recognized as a contributing factor).
Although works of visual art, as a viable commodity, have developed considerably over the years, an evident lack of sophisticated business development is apparent on the part of the artists creating the works of art. While investors have developed “art portfolios” and art-works investment strategies, contemporary artists continue to struggle to draw attention to their works of art, seeking the financial support of and promotion from benefactors, art-cognoscenti, collectors and gallery owners. Although investors are able to reduce their risk by investing in a diverse art portfolio, artists bear the full risk of their own personal success. The present disclosure attempts to address those issues to enable the diversification of risk incurred by the creation of visual art by individual artists.